KUALA LUMPUR, Jan 22 — China will continue to be Malaysia’s top trade partner and investor despite the looming trade war between the former and United States, the Ministry for International Trade and Industry (Miti) has said.
In a statement, its deputy minister Ong Kian Ming said the country’s total trade with China has increased by 8.5 per cent in the period of January to November last year, compared to the same period in 2017 — compared to just 6.2 per cent increase in our total trade.
“Even with the spectre of the US-China trade war looming, our trade with China continues to grow at a rate that is higher than our trade relationship with the rest of the world,” Ong said.
The statement listed his key points on the government’s policy towards Chinese investments in Malaysia, made in a conference with Deloitte Malaysia’s Chinese Services Group and the Bank of China (Malaysia) last week.
Ong said Malaysia’s total trade with China has increased rapidly from just 3.5 per cent of total trading volume in 2000, to 13 per cent in 2009, and then to 16.4 per cent in 2017.
This comes as total trade with the United States fell from 18.7 per cent — as the country’s largest trading partner — to merely 8.7 per cent.
Similarly, Japan’s share also fell from 16.7 per cent in 2000 to 7.9 per cent in 2017.
In addition, Ong said China is the top source of foreign direct investment (FDI) in Malaysia’s manufacturing sector, with investments of RM15.62 billion just between January and September last year — nearly one-third of total approved manufacturing FDI that year.
“More than 50 per cent of the approved manufacturing FDI from Chinese companies came after the 14th general election showing that companies from China continue to demonstrate confidence in the Malaysian economy under the new government,” he said.
This comes as recent studies showed that Malaysia may be among those who will largely benefit from the US-China trade war, with Ong citing Malaysia’s top rank in the Nomura Import Substitution Index, and a projection by the Economist Intelligence Unit.
Under Prime Minister Tun Dr Mahathir’s Mohamad leadership, Putrajaya has last year intervened in a number of projects undertaken by China’s companies inked with the previous administration, amid fears that the deals were lopsided.
However on a press briefing during an official visit to China in August, Dr Mahathir reportedly said he supported free trade as long as it was fair, noting that it was undesirable to have neo-colonialism owing to countries being at different stages of development.